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Ramalingam Kalirajan |10893 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 30, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Jul 22, 2025Hindi

I am 46 years old with 2 kids and looking to retire by 55 .

Ans: You have taken a bold step. Planning for retirement at 55 is a powerful goal. Having 2 kids makes it even more important to create a stable and predictable financial plan. At age 46, time is still with you, but each year now matters more. Let us assess the situation from a full 360-degree view and help you build clarity.

? Income and Expense Assessment

– At 46, your salary is likely near its peak.

– Maximise your income savings now.

– Track your monthly expenses in detail.

– Split them into essential and lifestyle expenses.

– Plan how these expenses will behave after retirement.

– Remove EMI-based expenses from post-retirement budget.

– Account for higher medical expenses post-retirement.

– Assume inflation of 6% in your long-term projections.

– See how much your future monthly retirement budget might look like.

– Aim to create a portfolio that generates this amount for 30 years.

? Emergency and Contingency Planning

– Keep at least 6 months’ expenses as emergency reserve.

– This should be in FD, liquid funds, or sweep-in accounts.

– Avoid investing emergency fund in stocks or equity funds.

– If you already have this cushion, no need to add more.

– Review the emergency fund amount every year.

– Increase it as your monthly cost of living goes up.

? Children’s Goals and Education Planning

– Two kids mean two major expenses in the future.

– Allocate money for their college and marriage separately.

– If they are young now, you have 5-10 years for college goal.

– Do not delay education planning any further.

– Start SIPs in equity mutual funds through MFDs with CFP credentials.

– Actively managed mutual funds give better flexibility and guidance.

– Avoid index funds; they don’t protect in falling markets.

– Index funds also lack smart rebalancing and sector allocation.

– Stay invested in actively managed diversified funds.

– SIPs with step-up facility will support inflation-adjusted education needs.

? Current Investment Assessment

– Check your existing investments now.

– Identify what portion is in equity and what in debt.

– Check whether it is aligned to your goals and risk tolerance.

– If holding ULIPs, traditional LICs, or endowment plans, exit early.

– These give poor returns, lack flexibility, and are insurance-heavy.

– Reinvest surrender proceeds in long-term mutual fund SIPs.

– Consult your MFD-CFP before redeeming.

– Avoid direct plans; they may look cheaper but lack ongoing review.

– Regular plans with MFDs offer support in market downturns.

– And they help realign your portfolio based on your goals.

? Health and Life Insurance Coverage

– Review your health cover amount.

– Rs 5 lakh family floater is not enough for modern medical needs.

– Top it up with a super top-up policy of at least Rs 15 lakh.

– If employer provides group cover, don’t rely solely on it.

– It ends the day you resign or retire.

– Buy a personal policy outside of employer coverage.

– For life cover, buy only term insurance, if you still need it.

– Ensure your life cover is 10-15 times your annual expense.

– Avoid mixing investment and insurance.

– Term plan plus mutual fund SIP is a better combo.

? Retirement Corpus Estimation

– You are 46 and want to retire at 55.

– That gives you 9 years to build the retirement fund.

– Your corpus must last from age 55 to 85 or 90.

– So, plan for at least 30 years of monthly income.

– Calculate your monthly expense at 55 (inflation adjusted).

– Multiply that by 12 and then by 25-30.

– This gives you a basic idea of the corpus needed.

– Add buffer for medical emergencies and lifestyle surprises.

– Corpus size also depends on your post-retirement lifestyle.

– Conservative lifestyles need less; luxurious ones need more.

? Retirement Investment Strategy

– Invest your monthly savings mainly in equity mutual funds.

– Use diversified, flexi-cap, and hybrid equity funds.

– Avoid large exposure to small-cap at this stage.

– Keep 70-80% in equity for next 6-7 years.

– The remaining 20-30% in short-term or conservative hybrid funds.

– Gradually reduce equity exposure two years before retirement.

– Move 10-15% every year to safer debt or hybrid funds.

– This glide-down approach protects your capital.

– Don’t invest in annuities; they give low returns and no liquidity.

– Create SWP (Systematic Withdrawal Plan) instead after retirement.

– SWP gives monthly cash flow and better tax control.

? Systematic Saving and SIP Strategy

– Start SIPs immediately in 3-4 diversified equity funds.

– Use SIP booster option every year to increase contribution.

– Monitor and rebalance every year with your MFD-CFP.

– Keep a goal tracker and monitor corpus every year.

– If market gives high returns one year, book some profits.

– Use this to fill debt allocation or emergency buffer.

– Don’t stop SIPs in market fall; continue with discipline.

– In fact, increase SIP in corrections if possible.

– Avoid direct investing platforms; they don’t offer personalised advice.

– Stay with MFDs who have CFP qualification for ongoing planning.

? Tax Planning for Retirement Investments

– SIPs in equity funds held over one year give LTCG.

– LTCG above Rs 1.25 lakh in a year is taxed at 12.5%.

– STCG is taxed at 20%.

– Debt fund gains are taxed as per your income slab.

– Plan redemptions wisely to avoid tax overload.

– Split redemptions across years to save tax.

– SWP after retirement should be within tax-free thresholds.

– Use tax harvesting before March every year.

– Consult MFD-CFP to manage capital gains efficiently.

? EPF and NPS Planning

– Continue contributing to EPF till retirement.

– At 8-9% return, EPF builds solid base for corpus.

– Don’t withdraw EPF when changing jobs.

– Let it compound till age 55 or 58.

– NPS is another good tool but use carefully.

– Invest only the minimum required in NPS.

– After retirement, NPS forces annuity for 40%.

– Annuity locks your capital and gives low return.

– Hence, don’t over-invest in NPS.

– Prioritise flexible instruments like mutual funds.

? Ideal Retirement Withdrawal Strategy

– At 55, start SWP from mutual funds.

– Create 3 buckets for withdrawal.

– Bucket 1: 3 years expenses in liquid or ultra-short funds.

– Bucket 2: 5 years expenses in hybrid or conservative debt funds.

– Bucket 3: Remaining in equity mutual funds.

– Withdraw monthly from Bucket 1.

– Refill Bucket 1 every year from Bucket 2 and 3.

– Review this strategy with your MFD-CFP every year.

– Adjust for inflation and market condition regularly.

– This strategy gives safety, growth, and steady income.

? Milestone-Based Financial Planning

– Have milestone reviews every 2 years.

– At age 48, check if corpus is on track.

– Adjust SIPs, expenses, or goals if required.

– At age 52, start rebalancing portfolio.

– Increase debt share and reduce equity exposure.

– At 55, do a dry-run of one year pre-retirement.

– Live only on expected retirement income.

– If you feel short, extend work by 1-2 years.

– If corpus is ready, go ahead and retire peacefully.

? Final Insights

– You still have time to retire by 55 if you plan smartly now.

– Save aggressively and invest wisely through MFDs with CFP guidance.

– Use SIPs, EPF, and goal-specific strategies.

– Keep emotions away and focus on disciplined investing.

– Avoid high-cost, low-return insurance products.

– Make retirement stress-free by preparing your finances early.

– Retirement should be a phase of joy, not financial worry.

– You can achieve this goal with proper planning and review.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.